I am approved for a home loan but only with a down payment.At this time we don't have any money to put down.

I was told by the loan officer that I could get a 2nd mortage loan to cover the down payment.Does anyone have any information about this?
Additional Details
Should I try for this or just work on our credit score until it reaches at point where we could get 100% finacing?

My husband and I were truly blessed we we bought our home. There is a program called Ameridream and if you are a first time homebuyer or a minority, the government will cover your downpayment. No gimmicks or paypacks. It was awesome. We saved 5k on the downpayment. We got an interest rate of like 6% and if we did a 80/20 the rate would have been 7.5%.

These piggy back loans were very popular last year.....

Your first mortgage might be 80% of the purchase......let's say 80K on a 100K purchase......You get a second home equity loan for the remaining 20% and buy the house.....

With interest rates going up, do you really want to risk having a 1st and 2nd on your home.....either lender can foreclose, not just file a lien.......

I would recommend a different loan officer and institution...There are too many options out there and quite frankly, the hard truth is if you haven't squirreled money away PRIOR to applying for a home loan, you certainly don't want TWO home loans....

If you finance more than 80% of the purchase price, you get hit with required PMI (private mortgage insurance).....it runs approx $45 for every $1,000 house payment.....

you want to determine if you'd rather have one loan w/ PMI or two loans, where the 2nd may be more than the PMI payment alone.

http://www.lendermark.com/not_enough_money_for_down_payment.htm

After reading all the feedback - You must be totally confused.

A 100 percent loan - is not totally out of your reach - There are FHA programs, payment assistant programs to help you. Look at your middle credit score, if you do not know your credit scores - have your lender tell you, or pull your credit from the 3 credit reporting agencies - BUT the person you are working with should tell YOU.

Lenders look at the middle score to qualify a person - and if your credit is low, than you will be going SUB-Prime, and any amount over 80 percent does not have MI - There are alot of companies I underwrite for that does NOT charge MI - normally the rate is slightly higher. Say you got qualified and your rate was 8.50 at par (Par, means that is what rate the lender quotes you, with no addon's to to the rate for the lender to make pts on the back - some Lo"s add pts on the rate to make their money - instead of charging it up front). The 8.50 does not have MI included.

FHA loans have MI included, Conforming A+ borrower's loans have MI included, but the rates are better starting in the mid to high 6's (with rates going up.) The more money you borrow - the higher the rate normally. There are alot of factors involved.

With a government loan - collections and judgements will have to be paid (most ppl do not know that) but for FHA it is true....

ALSO -

Example:
Decide on how much you want to spend, if you want to escrow the taxes and insurance. Say the taxes are 1200 a YR and insurance 800 a year (just an estimate, ok) That is 2,000 a year divided by 12 = 166.66 If you paid 1,000 a month now - (166.66) your P/I Principle and Interest would be 833.34. Now you decided on the price range you are looking into. If you have great credit, a 1 loan at 130,000 at a rate of 7 percent over a 30 year time would be 864.89 - This is just a estimate - ok -

It greatly depends if you need help with closing cost, (The seller could do Seller Help toward your closing cost). If that is the case, I normally tell my clients NOT to hackle over the price, since you are asking for closing cost help - especially if the home is thur a realitor, and the seller has to pay the realitor their fee which runs from 2-6 percent of the selling price, and you ask for 4-5 percent toward closing cost -assistance) Follow me so far??

Talk with a broker, a broker underwrites for many company's (I underwrite for 150 companies) so I only have to pull credit 1 time, and they look at my credit. A single lender (not a broker) has programs available, but they may not be able to help you and your situation, so you go elsewhere, and than that person pulls your credit (see what I mean.) If you shop, your credit is pulled and that is considered a soft pull, for a 30 day period. Just like shopping for a auto, it is good for 30 days. If you apply for a credit card, that is considered a "hard" pull and it drags down your credit score.

Try to find someone (broker) that will pull your credit one time, and submit your loan application to company's that will go off his credit report. By the way, a loan application is called a 1003, and they will issue you a GFE (Good Faith estimate, with-in 3 days, that is per the RESPA laws, and the TIL (Truth in Lending). This will tell you the up-front closing cost (etc) associated with your loan. This is a estimate only - not the final - but it does help you figure things out.

Good Luck, and if I can help in any way check out my web site, for links to all the credit reporting agency's and other useful information.

I hope you are not getting confused with so much information!

Here is a simpler explanation:

Ok.....if you are approved for a loan but requires you a down payment that means you are probably getting an loan for 80% of the value of the purchase and the 20% will probably have to be coverd by Private Mortgage insurance and your down payment.

If your so called "loan officer" said he could get you a 2nd loan that mean he is trying to get you financed the first 80% loan and the 20% is covered by the 2nd loan and your down payment.

If you want 100% financing you want a first loan for 80% and the second for a the rest of the 20% to complete your 100%.

Now my advice to you: BE CAREFUL!!!!

Interest rates are expected to continue to go up until the end of the year to fight inflation so MOST likely your 2nd loan will be a variable loan and you will be in deep trouble if you cannot come up with the ever growing monthly payment. If your so called "loan officer" was a good mortgage consultant, he would have given you different options and given you a good advice to try to fix your loans. Also he should have analized your situation and given you a game plan to help you better your score.

I would advice you to better you score and save some money because homes are not going anywhere soon. The market is slow anyways. Remember Real Estate is the best investment you will ever make in your life so you need to treat it like such

If you need more useful about buying a home you can read this article titled "Buying a home: gettin started". You will find it in the issue of May 2006 by following this link http://jrealestate.blogspot.com

You will also find some useful articles about credit.

Good luck

It sounds like you're being qualified for an 80/20. 80% of the purchase price will be the first mortgage and 20% of the purchase price will be the second mortgage. It ends up being 0% down, or 100% financing. You need to work with a consultant that is going to explain things a bit better to you...the fact that you don't know how your financing is set up is not a good thing. Switch lenders now!

If you can get approved for the 80% you should be able to get approved for the other 20% one way or another. If you are in Wisconsin, Colorado, Florida, or Minnesota I can help you on this. Just e-mail me the loan info amount, credit scores, income numbers that sort of stuff. Good luck

Hello -

How are you? The Mortgage Process is confusing at times, but I commend you for asking more questions. It is very smart to continue to educate yourself on one of the largest financial decisions you will ever make.

May I provide you at least some more information? Also I thought Wanda wrote a very good reply.

Here is my guidance:

Mortgage rates are rising and itâ€™s becoming more difficult for a prospective buyer to save up for the necessary down payment. Fortunately, there are ways around this hurdle.

Although homebuyers were once required to put down 20% of the purchase price, those times are long gone. Generally, lenders now require 3 to 5 percent down. The problem then becomes how to save up for that 3 percent.

What many donâ€™t know is that they have several options for coming up with the money.

RETIREMENT SAVINGS
Most 401 (k) or Individual Retirement Accounts will allow people to borrow or withdraw money early. Doing so can be a good strategy for the home buyer. With a 401 (K), one can borrow up to $50,000 or 50 percent of the balance, whichever is less, and then repay a loan over five or more years, with interest. The added advantage is that this type of borrowing wonâ€™t count as debt when a lender is assessing a personâ€™s qualifications for a loan. And there is also the possibility of getting better appreciation on money invested in real estate.

But, are there drawbacks from borrowing from a 401 K? There can be. For one thing, if the borrower quits or gets laid off from the job, he must repay the loan within 90 days or be subjected to penalties and taxes on the early disbursement.

GIFT MONEY
While borrowing against retirement savings is possible for people who were able to set money aside, there are many people who have little or no savings.

What many donâ€™t know is that some loan programs allow borrowers to use gift money to make down payments. This gift money must generally come from family members, spouses, domestic partners, or even nonprofits.

NONPROFITS
There are many nonprofit organizations, such as the Home Solution program, that help first-time borrowers. Sometimes the seller will pay 3 percent of the sale of the home, plus a fee, to the nonprofit. The organization then loans the buyer that 3 percent at closing time for use as the down payment. And the Federal Housing Administration generally insures both Gift and Non Profit Loans.

There are also programs run by nonprofits to help low-to-moderate-income people purchase homes. One such program is the Habitat for Humanity, which requires buyers to contribute by working on their own home as well as the homes of others.

Additionally, housing finance agencies in many states offer special loan programs for low- to moderate-income buyers. Fannie Mae, the biggest buyer of mortgages, offers loans through housing finance agencies that require down payments of as little as 1 percent or $500, whichever is less.

NO-DOWN and LOW-DOWN
Another option available is the no- and low-down payment loans. These types of loans, however, have the disadvantage of requiring costly mortgage insurance. Mortgage insurance benefits the lender in cases where a borrower defaults on the loan.

But, there are ways around this hurdle. A person can avoid mortgage insurance by getting a "piggyback loan." A piggyback is a home equity loan borrowed on top of a primary mortgage. For example, one could put 5 percent down, get a primary mortgage for 80 percent of the homeâ€™s price, and a higher-interest home equity loan for 15 percent of the price.

In one example, a couple made a 5 percent down payment from the proceeds of a previous home, got a 20-year home equity loan for 15 percent of the purchase price, and a 30-year mortgage for 80 percent of the price. The piggyback loan allowed them to avoid buying the mortgage insurance. While the payments on the second mortgage are roughly the same as what they would have been paying toward mortgage insurance, they can deduct the interest expense on their income taxes. And so thereâ€™s the added benefit that the piggyback loan is working for them, not the lender.

THE UNORTHODOX
Some African and Caribbean cultures use the unorthodox method of forced savings known as the susu. In the susu plan, a group of people use peer pressure to compel each other to save. They pool their money and then distribute it among themselves, periodically, such as on a monthly basis.

For example, a dozen people might contribute $500 each into the pool every month for a year. In the first month, one person gets $6,000. The next month, the next person gets $6,000, and so on. At the end of the year, each person has both contributed, and received, $6,000.

There are many options out there for getting around the down payment hurdle. Ultimately, the borrower must decide what method is most suitable to his needs.

If you have anymore questions, please feel free to call or email me directly. I will be attending a ministry meeting the 3rd -8th, so it might take me a few hours to respond.

Has the loan officer told you where you are going to get this second mortgage?

If your loan officer though you would qualify for 100% financing, they would be securing the second loan for you.

There is also the option of a seller-held second mortgage. This is where the seller finances part of the purchase price.

Get clarification about how your situation is being handled.

Also, ask your loan officer exactly what you need to do to improve your credit and qualify for a loan with no money down. Don't expect your credit to just get better on it's own.

100% financing is very hard -- lenders look supeiciously at someone who has no skin in the game. It makes them question how likely you are to make payments if you nothing to lose. You can try using a 2nd to cover the equity, but it will cost lots. Oh, and the loan officers do not give 2 sh!ts if it costs you money, because they're only interested in their commission.

I know of a program that requires very low down payment with competitive mortgage rates. The credit score requested is also low. I bet that this program can be very helpful to you. E-mail me and I will give you more details. The program is in effect in all states except Hawaii.

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